Allegiant Travel Company First Quarter 2017 Financial results

LAS VEGAS, April 25, 2017 (GLOBE NEWSWIRE) — Allegiant Travel Company (NASDAQ:ALGT) today reported the following financial results for the first quarter 2017, as well as comparisons to the prior year:

“We had another profitable quarter – our 57th consecutive profitable quarter,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. "Our transition to an all-Airbus fleet is underway and, so far, on schedule. One-time expenses associated with this transition will be lumpy, most of which will occur from now through the summer of 2018. By the end of this year we expect to have 60 percent of the transition complete, or a fleet of 51 Airbus aircraft. We should be finished with this effort and out of the MD-80 by the end of 2019.

“The first quarter is always a busy time for our team. Thank you to our team members whose hard work and dedication produced these excellent results.”

Notable highlights

New Chief Marketing Officer – Announced Ponder Harrison as new executive vice president & chief marketing officer
Network growth – As of March 31, 2017 the company is operating 358 routes versus 298 at the same time last year
New routes – Announced 23 new routes expected to begin in the second quarter of 2017
- Includes new city of Louisville, Kentucky
- Expansion of Destin/Ft. Walton Beach, Florida into a seasonal base
MD-80 bases – Expect to only have MD-80s in Sanford/Orlando, Florida and Las Vegas, Nevada by the end of 2017
Shareholder returns – $14.2 million was returned through a combination of the recurring dividend paid in March 2017 and open market share repurchases during the quarter. The company:
- Will pay a dividend of $0.70 per share on June 2, 2017 to shareholders of record as of May 19, 2017
- Has $86.8 million of share repurchase authority remaining as of April 25, 2017

First quarter 2017 revenue

TRASM results – First quarter TRASM decreased 4.4 percent
- Impact of Easter shift into April this year cost the quarter 1.5 percentage points of TRASM
- Impact of weather and irregular operations resulted in a decrease of a half percentage point of TRASM
New markets (markets operating less than one year) were approximately twelve percent of ASMs for the first quarter which is similar to last year

Second quarter 2017 revenue trends

TRASM guidance – Second quarter TRASM is expected to increase between 1.5 and 3.5 percent versus the second quarter last year
- Easter shift to second quarter is expected to add 1.5 percentage points of TRASM in the second quarter
- New markets (markets operating less than one year) are expected to be almost fourteen percent of ASMs for the second quarter, which is approximately the same amount as last year

First quarter cost trends

First quarter CASM ex fuel increased 11.6 percent versus the same period last year driven by:
- New pilot agreement – Added eight percentage points
- Elimination of the credit card surcharge – Added two percentage points
– In January 2017, we discontinued our credit card surcharge, which was applied as a reduction to sales and marketing expense
- Incremental stock compensation grants to executives – Added one percentage point
– Incremental stock compensation expense which included retention grants issued in Nov. 2016 and grants issued to both our new president and executive vice president & chief marketing officer as part of their employment agreements

Second quarter 2017 cost trends

Second quarter 2017 CASM ex fuel is expected to increase between thirteen and fifteen percent versus the same period last year, driven by:
- New pilot agreement – Expected to add six percentage points
- Elimination of credit card surcharge – Expected to add three percentage points
- Incremental stock compensation grants to executives – Expected to add one percentage point
- MD-80 retirement – The pulling forward of two retirements is expected to add a half percentage point due to write downs

Full year 2017 cost trends

Full year 2017 CASM ex fuel is expected to increase between nine and twelve percent, higher than prior guidance, driven by:
- New pilot agreement – Expected to add seven percentage points
- Elimination of credit card surcharge – Expected to add three percentage points
- Reduced ASM projections – Expected to add one percentage point

• Earlier than planned MD-80 retirements
• Lower MD-80 utilization in the second half of the year to minimize excess crew training
• Shifting international flying to 2018
  - Incremental stock compensation grants to executives – Expected to add one percentage point
  Maintenance and repairs expense is expected to be between $100 and $110 thousand per in-service aircraft per month for full year 2017, higher than prior guidance
  - Increase is due to more expensive parts, repairs and increased line maintenance costs
  Total ownership expense per aircraft per month – Full year 2017 ownership expense per in service aircraft per month is expected to remain between $125 and $135 thousand, consistent with prior guidance

Balance sheet activity and full year 2017 trends

Full year CAPEX guidance (Excluding Airbus deferred heavy maintenance) is expected to be $521 million, consistent with prior guidance
Raised $22 million in debt proceeds during the first quarter
- Currently have eight unencumbered Airbus aircraft